⚡Crypto Alert : Altcoins are up 28% in just last month! Unlock gains and start trading now - Click Here

WTI Manages to Extend Winning Rally – All Traders’ Eyes on EIA Figures!

Posted Thursday, February 18, 2021 by
Arslan Butt • 2 min read

During Thursday’s Asian trading hours, the WTI Crude Oil prices extended their week-long bullish rally, hitting a multi-month high above the mid-$ 60.00 level, after the American Petroleum Institute (API) data reported a dip in inventories. The energy benchmark got an additional lift from the latest production halt in the Permian Basin, triggered by the unusual weather. Meanwhile, the hopes of the US stimulus bill and global economic recovery from the coronavirus (COVID-19) pandemic have played a significant role in underpinning the crude oil prices.

The hopes for the US stimulus package promised by President Biden could be behind the gains in crude oil, as they have raised hopes of an increased fuel demand. Across the ocean, the tightening of global supplies, led by the Organization of the Petroleum Exporting Countries and allies (OPEC+) also lent additional support to the oil market. Moreover, the crude oil prices also got a boost from the from a weaker US dollar, as the oil price is inversely related to the price of the US dollar.

On the bearish side, the coronavirus (COVID-19) concerns remain on the cards, which could cap the upside momentum in crude. WTI Crude Oil is currently trading at 61.78, and consolidating in the range between 61.42 and 62.27. Traders seem cautious to place any strong positions ahead of the data from the US Energy Information Administration, which is due later in the day.

On the data front, the American Petroleum Institute showed a draw of 5.8 million barrels for the week ending Feb. 12, against the 2.175-million-barrel draw in the forecasts and the 3.5-million-barrel draw recorded during the previous week. Crude oil gained support amid an on-going reduction in both the number of COVID-19 infections and the death toll from the virus, which triggered calls for the economy to be reopened in Australia, New Zealand and the UK. However, the upticks in the US stock futures could be short-lived or temporary, as the China-US tussle is picking up pace after US President Joe Biden criticized China regarding Beijing’s position on Taiwan, Hong Kong and the Uyghur Muslims. Thus, the mixed tone surrounding the market trading sentiment is helping the higher-yielding crude oil prices to stay bid, on the back of the weaker greenback.
As a result, the broad-based US dollar failed to gain any positive traction, remaining bearish on the day, as the upbeat market mood decreased the safe-haven demand for the dollar. The US dollar failed to gain any meaningful support from the upbeat US data. Therefore, the losses in the US dollar have become the critical factor that has kept a lid on any additional losses in the crude oil prices, due to the inverse relationship between oil and the greenback. The US Dollar Index, which tracks the local currency against a bucket of other currencies, is trading at 90.933.

Looking forward, market traders will keep their eyes on the official inventory data from the US Energy Information Administration (EIA), which is due later in the day. Meanwhile, the US Consumer Price Index (CPI) data will also be key to watch. In addition to this, the chatter surrounding US President Donald Trump’s impeachment and the coronavirus updates will not lose their importance. Good luck!

Check out our free forex signals

Follow the top economic events on FX Leaders economic calendar

Trade better, discover more Forex Trading Strategies